Louisiana-Pacific Corporation LPX came up with solid first-quarter 2017 results buoyed by higher pricing at its Oriented Strand Board or “OSB” division and a 16% volume increase in Siding segment.
The company reported adjusted earnings per share of 33 cents in the first quarter of 2017, beating the Zacks Consensus Estimate of 31 cents by 6.5%. Apart from delivering better-than-expected earnings, the reported number increased significantly from the year-ago profit of 7 cents per share.
Net sales of $610.9 million in the quarter surpassed the Zacks Consensus Estimate of $578 million by 5.7%. Also, net sales increased 21.1% year over year.
Adjusted EBITDA from continuing operations was $112 million in the quarter compared with $52 million in the prior-year quarter. This marks the highest adjusted EBITDA in the last four years.
Segmental Analysis
OSB: Sales at the OSB segment increased 23.7% year over year to $268.4 million.
In the first quarter, adjusted EBITDA was $75.3 million, up a significant 151% year over year.
Sales volumes remained flat year over year, while pricing increased 25%, driving solid operating results.
Siding Segment: The segment manufactures products under two categories — SmartSide siding products and related accessories, and CanExel siding and other related accessories. These products are used for new constructions, repair and remodeling and outdoor structures such as shed. The segment also produces a limited number of OSB products.
This segment’s sales were up 18% to $214 million on a 2% increase in SmartSide average sales prices and 16% rise in volumes.
In this quarter, the Siding segment recorded adjusted EBITDA of $48.5 million, 41% higher from the prior-year quarter.
Engineered Wood Products ("EWP"): The EWP segment makes I-Joists (IJ), laminated veneer lumber (LVL), laminated strand lumber (LSL) and other related products. These products are used in residential and commercial flooring and roofing systems.
Engineered Wood Products sales grew 14.3% year over year to $82.1 million in the quarter. Volumes of IJ increased 11% while that of LVL and LSL were up 2% from the prior-year quarter.
Pricing increased 2% for LVL and LSL and 1% for I-Joists. Adjusted EBITDA was $4.5 million, compared with $0.8 million in first-quarter 2016.
South America: This segment comprises facilities in Chile and Brazil. Segment sales increased 23.9% year over year to $37.8 million.
Volumes improved 23% in Chile for selling imported products and 1% in Brazil because of continued economic recession in the local market. However, on a U.S. dollar basis, pricing was up 4% in Chile and 11% in Brazil.
Adjusted EBITDA of $7.3 million reflected a marginal increase from $7 million in the first quarter of 2016.
Other: Net sales were $8.7 million in the quarter compared with $6.1 million a year ago.
2017 Outlook
The company expects to post solid second-quarter results given higher OSB pricing, continued siding growth, several new product launches and relatively flat raw-material pricing.
Capital expenditures are projected in the $175–$200 million range.
The company expects to start paying cash taxes in 2017. In the second quarter, the company anticipates tax payments just over $90 million. However, the company doesn't plan to pay cash taxes in Canada yet owing to the net operating losses.